Ruffling feathers
Posted on March 19th, 2017

Editorial Courtesy The Island

Whether public interest activist Nagananda Kodituwakku will succeed or not in his attempt to end the long-running practice of enriching legislators by the issue of duty free permits must await the determination of a three-judge bench of the Supreme Court headed by Chief Justice Priyasath Dep. However that be, Kodituwakku’s efforts certainly enjoy the support of public opinion which successive governments have totally ignored in continuing to bestow this benefit on the political class. The sunshine has been lavishly spread around to senior public officials, state-employed professionals, university dons and some others who have also benefited from these permits. Whether there is a reliable figure on the resulting revenue loss to the state (and aggrandizement of the beneficiaries) or not, we do not know. But Kodituwakku has placed a figure running into the billions on what the perk had cost treasury coffers on the issue of these permits to MPs.

A former customs officer and an attorney-at-law, Kodituwakku is arguing his case himself. He has used the Right to Information law (RTI) to good effect and obtained from the Department of Motor Traffic the names of 85 Members of Parliament belonging to both the Government and Opposition who have made full use of the scheme and stuffed their pockets. He has told court that most of the vehicles have first been registered in the names of the permit-holding MPs and then transferred to the buyer immediately thereafter. It appears that the buyers had funded the imports too and the sellers have coolly pocketed the huge difference between the cost price and the agreed sale price! It is not only MPs who have sold vehicle import permits. Other beneficiaries, including those issued permits on the basis that they were big income tax payers over many years, have also done that. They have been allowed to do so and such sales were not illegal, as far as we know. The taxpayer privilege has now been discontinued after it was in operation for a limited number of years.

It is not necessary to labor the point that motor vehicles imported into the country have been expensive to buyers even in the spacious early post-Independence years. This is because governments, seeing an excellent revenue stream in vehicle imports, have always taxed them heavily. Taxes then were, of course, nowhere near what they are today when high-end vehicles may be taxed 200-300 percent of their cif (cost, insurance freight) value. Incomes then too were not what they are now; so also the exchange rates and the country’s money supply. There was a time when there was some reduction in the very high duty rates imposed on vehicle imports. That was due to the treasury finding that sky high duties necessarily reduced the quantum of imports and what was gained on the duty swings was more than lost in the roundabouts with fewer vehicles brought into the country. Eventually a balance of sorts was achieved although it is obvious to all that our roads lack the capacity to handle even a fraction of the loads they carry.

Quite apart from the lack of equity, which must necessarily be among the first principles of taxation, governments have bestowed vehicle perks unaffordable to an economy with limited resources on its employees. If a government official, be he/she a minister or somebody lower down the political or bureaucratic hierarchy, is provided an official vehicle that is chauffeured and fuelled at taxpayer expense, why should that official be given a duty free or concessionary duty permit worth lakhs if not millions of rupees to import a private vehicle? It is no secret that official vehicles are freely abused for private purposes and little or no effort is made to curb such malpractices. Time was when not even ministers, permanent secretaries, heads of departments etc. were allotted official cars. They drove from their homes to their offices and back in their own private vehicles and paid their drivers (they were not grandly called chauffeurs in those days) out of their own pockets. Government servants at a particular level were given car loans – we do not know whether these were interest free or low interest – and they used them for official travel claiming mileage at specified rates. Older public servants would remember that these claims were quite sufficient to meet the loan installments. But times have changed and vehicle privileges bestowed on employees of both the public and private sectors here are far ahead of what prevails even in the rich developed countries.

Be that as it may, the result of the litigation Kodituwakku has initiated is awaited with wide anticipation. He has sought a writ calling upon the court to direct the Bribery Commission to initiated “a credible and independent” investigation into the abuse of the tax-free permits by the MPs he has cited. While the Attorney General’s representative appearing in this matter had informed court that an investigation into the complaint to the Bribery Commission had begun, the petitioner had rejected this assurance saying nothing was happening. The court must, of course, look at this matter from the standpoint of the law rather than other considerations including what people think. However it may be said that some judicial activism in matters such as this, as seen for example in India, will not be out of place. Courts often do not grant what petitioners seek in actions before them. But they have been known to make what is called obiter dicta, a judge’s expression of opinion uttered in court or in a written judgment, but not essential to the decision and therefore not legally binding as a precedent. Such expression of opinion has often signaled the right direction.

If there is no legal barrier, there will be no course correction. That much we can be sure of. It is very difficult to take back what has been granted – especially to influential sections of the polity and the bureaucracy. One reason why President Premadasa faced an impeachment attempt was because he was trying to stamp down on MPs selling their duty free vehicle permits on so-called ‘open papers.’ He backed down on that attempt. Whether he wins or loses, Mr. Nagananda Kodituwakku must be congratulated for his efforts. His action has ruffled feathers in many dovecotes.

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